Video images obtained by NBC 6 from an undercover operation that landed Pascal Reid and Michel Espinoza in jail show the men’s surprise when agents with guns drawn rushed the room.

The two South Florida men are charged with money laundering in what's believed to be the first local prosecution in the U.S. involving the bitcoin.

Bitcoins are a form of virtual currency that's getting more popular due to lower fees and instant transfers without the need to go through a bank. People use the newfangled electronic currency on the Internet, and make online payments in a system that is not overseen by any central financial authority.

Miami-Dade State Attorney Katherine Fernandez Rundle, U.S. Secret Service Special Agent In Charge Paula Reid and Miami Beach Police Chief Ray Martinez announced that Reid and Espinoza were arrested in separate operations and are both being charged with money laundering.

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In court, both Espinoza and Reid have denied the allegations. Both Reid and Espinoza entered not guilty pleas and are both now out on bond.

Like any currency, the value of the bitcoin fluctuates. It is currently valued at about $475 per coin.

Bitcoins are becoming more common at South Florida establishments, including Latin House Grill in Kendall. Customers transfer money from their bitcoin accounts on their smart phones straight to the restaurant to pay the tab.

“It has increased our business quite a bit,” said Latin House owner Michael Sanchez. “With bitcoin, the transaction fee is so minute that you can send $50 and I receive $50 and it doesn't cost you anything else."

Bitcoins can also be used to buy merchandise online. Businesses like Tiger Direct and Overstock.com accept bitcoins.

“There are a lot of legitimate businesses that are using bitcoins,” Rundle said.

But prosecutors and federal agents said the new currency is opening the door for a new wave of crime.

“This has no regulation,” Rundle said.

Because of that, the bitcoin opens a Pandora's Box. The U.S. Secret Service told NBC 6 that bitcoin accounts are set up with no verification of who actually owns the account. The bitcoin can be transferred from one person to another without any controls.

“We’ve seen in other areas where it's being done with drugs and other contraband and in this case, it's bitcoins,” Rundle said.

Arrest affidavits say Reid and Espinoza were willing to each accept $30,000 in cash and sell bitcoins to undercover agents even after being told the transactions would ultimately pay for stolen credit card numbers. Reid was told some numbers came from the massive breach at Target.

At a Starbucks and inside a hotel, Secret Service agents were watching as an undercover Agent Kramer can be heard on video telling Reid, "“I’ll be waiting on dumps to come in or I'll go to Sunny Isles and get a bunch of cards and then sell them all."

Reid responded by saying, "Nice. Do you know anyone who does like ID stuff?”

Agents followed Reid and the $600 cash the agent gave him that day to an apartment building and a bank.

Espinoza met an undercover officer an ice cream shop and inside a hotel on Ocean Drive. Video shows 30 $100 bills on the table and an undercover Miami Beach detective counting out the bills.

“What we have here is a group of folks that knew they were taking proceeds from illegal activity, in this case credit card fraud, and they met with undercover agents and they basically did that in exchange for currency, if you like, of bitcoins," Rundle said.

The defense Reid and Espinoza are mounting is based on the newness of the bitcoin. Their lawyers claim the pair committed no crime in the videos because the bitcoin isn't listed as an official currency by the government.

One Secret Service agent, who cannot be identified, said honest people using bitcoins can be hurt by illegal activity because crime is one factor that can affect the value of bitcoins.

"An honest person can be impacted because it's being used for nefarious purposes," the agents said. "You have the criminal element. It can have an effect actually on the price, it does affect the price."

Meanwhile, the Secret Service urges bitcoin users to buy them only from a service that's licensed to transfer currency.